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PSG Angles and Perspectives: Q2 2020

30 July 2020

PSG Angles and Perspectives: Q2 2020

The quarterly newsletter from PSG Asset Management.

In this edition, we consider the investment universe six months into a global pandemic. Consensus in the market has been positioned in a very narrow range of stocks, and we see a number of high-conviction views that the markets will continue to favour the same winners as over the past three years. This has given rise to predictable consequences: investors selling low and buying high. This will have a detrimental impact on long-term returns, as we believe the prospects of contrarian investing have been enhanced, and that most investors will be capitulating at exactly the wrong time.

Introduction

All quality is not created equal
Some investors believe that if you buy quality companies and hold on to them for a long time, you are bound to make money. This is not entirely true, as this simplification ignores a cardinal piece of the puzzle – the starting price of the investment. We know great returns are often made in times of great discomfort, by those who have the courage to act when others fall prey to their emotions. ... Read more

Looking beyond the corona crisis

We are increasingly intrigued by the possibility that the future could look very different to the most recent experience. While the most recent journey has been painful, it must be said that we consider the outlook to be promising. We believe the opportunity from this point is immense for disciplined investors willing to retain a long-term, patient mindset and allocate capital to good, but undervalued, securities. ... Read more

Why it is a bad time to give up on contrarian investing

Investors around the world have been scrambling to increase their holdings in popular stocks. It looks like they are giving up on the cheap underperformers. Our non-consensual view is that the environment is conducive to the next three years being very different to the prior three: the extent of the crowding in popular sectors sets the scene for aggressive future rotation. The current environment favours increased exposure to cheap contrarian investments at a time when most investors are reducing their exposure to these counters. ... Read more

Obscured quality - the market is pitching classic 3M opportunities

Investment markets move in cycles. Sometimes, opportunities abound to acquire the businesses we love to own: higher quality companies that are out of favour and hence cheap. Our 3M investment process seeks out mispriced quality assets in uncrowded areas and allows us to buy above-average quality companies at below-average valuations over time. Our long-term investment track records have always been built on harnessing such opportunities for our clients. ... Read more

Portfolio Holdings as at 31 June 2020

  • Click here to view the portfolio holdings of the funds as at 31 June 2020

Performance to 31 June 2020

  • Click here to view the performance of the funds to 31 June 2020

Unit trust summary

  • Click here to view the unit trust summary of the funds as at 31 June 2020

PSG Angles and Perspectives: Q2 2020 (pdf)

  • Click here to view the full document in PDF

Archive of previous editions

  • Click here to view previous editions

Recommended Articles

Introduction Q2 2020

Looking beyond the corona crisis

Why it is a bad time to give up on contrarian investing

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